The Ricardian equivalence argument says that households and businesses view any increase in government spending as a sign that tax burdens will increase in the future, which will cause a decrease in private spending in anticipation of higher future taxes.

Question

Quizplus · Accepted Answer

The Ricardian equivalence argument states that households and businesses see an increase in government spending as a sign of future tax burdens, causing a decrease in private spending in anticipation of higher taxes. Therefore, the statement is true.

The Ricardian Equivalence Argument Says That Households and Businesses View